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Consumer Credit and Lending: Insightful Review of Key Trends and Predictive Financial Metrics

What Recent Trends Can Be Observed?

Historically, consumer credit trends have been characterized by cyclical changes. However, recent times have seen a trend towards non-traditional forms of lending such as peer-to-peer lending, a testimony to the influence of digitalization. Furthermore, there has been a conscious move towards responsible lending practices, with emphasis on controlled disbursals and risk assessment. The profiling of consumers based on their repayment ability and credit histories, rather than simple income brackets, is another identifiable trend.

How Has Consumer Behavior Evolved?

Consumer behavior towards credit has undergone major transformation. Greater financial literacy and awareness have resulted in more discerning consumers who evaluate rates, terms, and overall packages before deciding on their credit provider. An important factor influencing this trend is the growth of easily accessible online information and user experiences. As a result, lenders must adapt their strategies to cater to a more educated and demanding clientele.

What Are the Predictive Financial Metrics?

Key predictive financial metrics include the borrower’s credit score, debt-to-income ratio, and loan-to-value ratio – these aid lenders in their lending decisions. Credit analytics, using artificial intelligence and machine learning, are increasingly being used to anticipate default rates based on behavioral patterns. Resulting predictive models are essential in navigating the dynamic lending landscape and ensuring that lending decisions are sustainable, manageable, and financially sound.

Key Indicators

  1. Total consumer credit outstanding
  2. Year-on-year growth rate of consumer credit
  3. Delinquency rates on consumer loans
  4. Volume of new consumer loans
  5. Average interest rates on consumer loans
  6. Rate of credit card loans
  7. Household debt-service ratio
  8. Non-revolving credit to revolving credit ratio
  9. Consumers credit score distribution
  10. Loan rejection rates